Several months have passed since Russia’s president Vladimir Putin signed the Forex law – since then the work on the actual implementation of this legislative piece has been slowly progressing. The first documents complementing the law have already been published by the Bank of Russia, the regulator to be responsible for the Forex industry in the country.
On Friday the Bank of Russia published a proposal for a normative act set to stipulate the requirements for those Forex companies that are registered and regulated outside of Russia, but would like to offer their services in the Russian market. This is possible if a foreign company already has or decides to open a representative office in Russia. This business will have to be certified by Russia’s “Megaregulator” and then the company is good to go.
Let’s focus on some of the main requirements:
The foreign company should have a history of at least five years of regulated business activity in the financial segment.
The foreign company should NOT be based (regulated, registered) in an offshore zone. This means that all companies coming from the following jurisdictions are not eligible to open a certified representative office in Russia:
Note, please, that Cyprus is not a part of the list. The country was struck off the offshore zones register in 2012.
The number of foreign employees in the representative office should not exceed 2 individuals.
The staff, management in particular, should not have committed any crime nor be prosecuted.
The broker should present a heavy amount of papers, including copies of all licenses, recommendations from a partner bank, as well as audited financial results for the most recent year of operation, etc.
The broker should have (own or rent) a brick and mortar office in Russia, with the latter not to be in a building where people live or to be shared with another company or diplomatic mission.
The approvals to be issued by the Bank of Russia will be temporary – they will be valid for a period of 3 years. Of course, there is a possibility for renewal.
Meanwhile, the employees at these offices will have to brace themselves for checks by Russian regulators. The law will make mandatory the carrying out of such checks at least once a year.
The regulator will need 60 days to decide whether to approve an application for a representative office by a foreign company. In case the Bank of Russia rejects such an application, the company will have to wait 12 months before submitting a request again.